Midterms or Angry Clients? The Student Entrepreneur
(Transfered from Yukaichou.com) Part I: As the Y-Generation slowly joins into the work force and the X-Generation being unsatisfied with their current jobs as middle-managers, more and more of these impatient bunch dream of having their own company and becoming a multi-millionaire…soon. But how soon is that? Most people just fascinate themselves in such thoughts, but never have the energy or risk-taking behavior to actually start one. After all, most businesses fail. Isn’t it smarter to wait until one has more business experiences working for someone else and have saved enough money? Some people, on the other hand, commit to action and start their own small businesses early in their career, as working for someone else truly isn’t their thing. And finally, there are the few who simply have the passion of entrepreneurship and commit themselves to their own business long before they are eligible to consume alcohol. These student entrepreneurs are not interested in school and its social life, but feel an insurmountable force to seek out opportunities in society and to see their visions become reality in this world. Being a student entrepreneur myself, I will attempt to share the mindset of these people in comparison to others, as well as the actual actions and paths of becoming a young entrepreneur. Conformity in society invites students to study, get good grades, find a good job, and rise up the corporate ladder. Once you do that, you can complete your dream of starting your own business. People’s risk-averse tendency works well with this system too. Statistic shows that about a third of all business fail within a year, and 89% of small businesses shut down within five years. That sounds pretty scary. The problem in this, at least to the entrepreneur, is that the start of fulfilling one’s dream happens after forty-five. Do people truly learn what it takes to be an entrepreneur before that, or merely a good manager? Could the first ten years be more efficient in one’s growth than working at the bottom of the ladder? At forty-five, he/she might only have the chance to try one or two startups. Then it’s either a multi-millionaire retirement, or losing much of one’s life saving. To the young entrepreneur, a whole life is spent going after his/her dream, and failure simply means learning and moving on to something that works. Rather fail early in life and be successful later on then the other way around. True, there are many who simply want to work for a couple years, and then go into entrepreneurship, but that presents a problem of its own: the reality trap. When one is working and haves stable income, it is incredibly hard to suddenly quit his/her job and start a business. How am I going to pay the bills? How do I feed my family? Most people stay in their unhappy jobs and await their mid-life crisis. Even when one gets older, he/she starts to worry about retirement money, making it hard to commit either. I’ve talked to many highly respected professionals who constantly plan in starting their businesses, but once they think about the first step, they suddenly decide to wait for their financial situations to be more stable. Few years down the road, nothing has happened yet. There is nothing wrong with getting a stable job in the corporate world, but if one does dream of starting his/her own business, it only becomes harder and harder as you acquire more to lose. True, some people do manage to break away from the reality trap and start a business in relative young age. However, many of them lack the entrepreneurial spirit and passion, but simply have a fantasy of being their own boss and becoming rich. Michael Gerber, in his book “The E-Myth Revisited” claims that it is a myth that individuals who start businesses are entrepreneurs. They are mostly technicians who had an “entrepreneurial seizure.” What these people often fail to realize, is that when starting a business, especially in the first few years, the founder often needs to put in a lot more hours while making very minimal money. After a year or two of such grinding, the founder asks himself, “Why would I be doing this when I can work half the time and make thrice as much if I get hired in a company?” A simple no-brainer, the business gets closed down. Without the passion itself of running a business, it is hard to stay in it. In a summer entrepreneurship program to undergraduates in the UCLA Anderson School, Professor Abe pointed out the common analogy of entrepreneurship being like jumping off a plane. Before the jump, the person is given the tools and materials to build a parachute, and he needs to build it in mid-air before hitting the ground. In order to do so, the person must be extremely good at building parachutes. The plane must also be very high in altitude to buy enough time for the builder. Needless to say, the rewards of safely landing must be very large for one to attempt such a task. Using this appropriate analogy, it is important to realize that other than the skills, altitude and rewards, the stress of building a parachute while falling is also tremendous. To the risk-averse population, that isn’t precisely a fun process. From personal experiences, building a business can be one of the most stressful activities one can engage in, far surpassing the stress that “smoothers” during finals week (of course it’s worse when you have to deal with both). In business, too many things can go wrong. Things might be different than planned, employees might be slow or make some mistakes, IT systems may fail. Even if the company does everything perfectly, since it usually relies on many other companies with its supplies, logistics and communications, and as these companies also deal with budget problems and meeting tight deadlines, things could easily go wrong. And when in business, when one thing goes wrong, a chain of others go wrong too: you can’t produce the demanded quantity and quality, you can’t deliver your goods on time, customers become angry and refuse to pay, this floods your customer service and hampers your cash flow, which makes you unable to pay your employees and suppliers…the list goes on. All this accumulates to the grind of running a business, which in a short time obliterates peoples’ false fantasy being their own boss. On the other hand, Bill Gates, like many other billionaires who didn’t have a college degree, quit his Harvard education to start his business. For one, it made him grab a great opportunity proactively at the right time. But at the same time, it also puts himself on the spot. He has no choice but to keep moving forward, as he does not have the good income to fall back on. When you have no other alternative, you cannot fall into the reality trap, and it will give you the drive to launch yourself into your business until you succeed. As your income and opportunity costs build, it becomes more and more difficult to become an entrepreneur. As we can see, running a business might not always be fun. If you don’t have the passion and drive to bring you through the hard times, you can easily fall into the majority of businesses that close down. I am not discouraging people in getting into entrepreneurship. If anything, people need to be encouraged. I’m simply asking people to have the right mind-set and expectations when getting into such fields. The entrepreneurship spirit can be developed, but it has to be sought after. Entrepreneurship is a lifestyle of excitement. It’s making one’s vision create a difference in society through creative adventures. Part II: In response to the overall fear of starting one’s own business early on, I will explain why I think college is the best time to become an entrepreneur. As we know, many people have the mindset of first establishing a corporate job, getting experience and accumulate wealth, then finally launching their business. Sure, you can do that, and it makes sense. But excluding the energy required that you would need at such an age, you are not living the “life” of an entrepreneur, but simply a life ending in one. When I first entered college, I noticed that school was not teaching the things I wanted to do with my life. They are of similar genre, but they are more theoretical than practical. To satisfy my passion in business, I was then stuck with the choice of doing data-entry work in a large prestigious firm, or start my own small business and learn the whole operations of a business. For some reason, the latter seemed to be more appealing. But while most people get stuck on the question “Gosh, how do I start?” entrepreneurs go and find out. An entrepreneur is a dreamer who brings the dream into reality. In the practical sense, here are a couple reasons why college is the best time to start a business. Relative financial freedom For a good amount of people, college is a time when you don’t have to worry about paying the bills, feeding the family, and other money issues that forces one to fall into the “reality trap” of being enslaved by a job. Most students are still supported by their parents during this time. Not having the pressure of working a 9-5 job to survive frees up the ability of the student to pursue his/her passion. Part-time jobs are often for resume building and luxurious spending. If you start your business when you are still a student, you might have enough time to build your business to the extent that, when you graduate, you will be able to support your living. On the other hand, if the business didn’t turn out well, it would be happening in a relatively risk-free situation. You can always find a job then to pay the bills (funding and financial risks will be explained in the next part). College is the best time to find help When you are in the work force, people only see you either as being capable, or not. If you are not, they find someone else. But most professionals are quite willing to help out motivated students. They see students as leaders of tomorrow, instead of people at the bottom of the ladder. To be a successful entrepreneur, it is essential to have mentors who can share their experience with you. In the business world, anything can go wrong, and inexperienced entrepreneurs will hit many walls before they figure things out. If you have someone who can guide you to avoid the walls that he/she hit, business building will become so much more efficient. Being a student is the best time to find mentors. Large control of your own time College is the time between getting controlled by parents, 8-4 high school life and getting controlled by your boss, 8-5 working life. This is the time where you can decide how do you want to spend a day. Whereas most people consider this in-between zone to be the time to have fun, you can start your own business and have a life of fun too. To entrepreneurs, running a business is fun. It can be comparable to Starcraft, chess and other games where you have an army or kingdom, and with a limited budget, try to expand and become strongest in the region. True, it’s a lot more work involved than a computer game, but it’s also something very real and can potentially change your life and even society. Stay ahead of the game So as we previously discussed, college is the time to have some fun for most. Sure, you worked hard up till college and you have your whole life to work. Why work more in college? However, this is often the difference between working happily for your life and working…well, not so happily. Yes, you deserve to have fun and take a rest. But if everyone else is having fun and you push for your future, you will be ahead of the game. The difference between 95% and 96% is not just 1%. If you are 96% and everyone else is 95%, you win. Winner takes all. So if you just work when others are working, you are being “normal,” leading to a normal career. But if you work when others are having fun, every inch of work you push makes a competitive difference! Personal and business growth is like compound interests. The earlier you start, the faster it builds later on. You can have fun and be mediocre your whole life, or put in the early effort and excel in your field. Many of these points are not limited to entrepreneurship itself, but it is mainly to encourage students to use this college time to the fullest, to be productive. And with this productive time, if you have an interest in entrepreneurship, this is a good time to start. Entrepreneurship isn’t for everyone, but college is a great time to find out if it is for you. It might turn out more rewarding than anything in your life. Once you have decided to become an entrepreneur, the next part we will see how to become and grow as a successful student entrepreneur. Part III: In the two previous parts of this series, I wrote about why your college years are the best time to start a business, as well as responded to some common concerns about entrepreneurship. In this article, I’ll discuss how to become a student entrepreneur and what to do once you reach that goal. 1. Network The first step a student can do is to meet as many professionals and experienced entrepreneurs as possible. To answer the question “how do you start anyway?” you must actually go and find out. The internet is a valuable resource, but nothing beats networking with people. Go to as many professional and speaker events, and make sure you establish a personal relationship between these people. Get their business cards and contact information and email them. Make follow-up calls too if you don’t get a reply. The important thing is to be recognized as a young entrepreneurial person so they will share you the relevant experience they have. Sometimes they will even notify you of new business opportunities. Knowing who to ask for help and advice can open all kinds of doors for you, including finding funding from venture capitalists, angel investors, or private investors. 2. Interning in a large firm may be less desirable Despite popular thinking, I feel that if an entrepreneurial student were finding an internship, a small startup firm is so much more desirable than large companies. True, large companies look good on your résumé, but you don’t really learn a whole lot from internships that make you do data-entry and cold calling work, at least not for starting your own company. Working in startups though, will let you see the whole picture of the operations of the company, and when you have questions, the first person you talk to might be the Marketing VP, CFO, or even the CEO. Vast amounts of knowledge can be obtained through interning at smaller firms. This is one of the small risks one takes as an entrepreneur. 3. Find a mentor Very similar to networking, but in this case it is directly a mentor-apprentice relation. As previously mentioned, professionals see students as the leaders of the future, and so they are often more willing to help them out. Since in business there are infinite possible problems that can happen, having a mentor to guide you through the pitfalls in starting and running a business can save you a great amount of money and time compared to choosing the trial-and-error method on your own. 4. Take initiative. Be persistent. Be confident. I think these are the most important things in the business world. Even if you are incredibly intelligent, if you don’t have strong execution abilities, nothing will get done. Taking initiative means changing your thoughts into reality. If you think an idea is good, take action and do some research. If you think you should talk to someone, just go on and do it. Showing persistence means not giving up easily. I have learned that almost anything can be obtained through persistence, through never giving up. There are many doors in life that open for those who walk the extra mile. 5. Use your time wisely As mentioned previously, college is the time where you can have a lot of control of your own time. It also means that you can waste it or use it wisely. Every moment should be used to be productive and create value. Time is too valuable to kill. Think of it this way. For the game addicts out there, if you were playing a RPG (Role Playing Game), you wouldn’t stay in town and be idle and just walk back and forth, back and forth right? Of course not, you’ll be outside killing monsters, getting experience, learning new skills, and getting better gear. So if you were your own RPG character, why would you be idle and let other people level up? Time is one of the only things you can’t accumulate more of through life, even if you become a millionaire or billionaire, so use it wisely. Make friends but don’t party too much and play fewer games that won’t help develop your future goals. 6. Observe. Understand people. Look for problems and opportunities Entrepreneurs are people who recognize problems and find solutions. When you go through your daily life, observe your surroundings. Is there something that can be better? You should understand the needs of people, how people think and feel. After all, business involves dealing with people, whether they are your clients, suppliers or employees. Knowing what they want will definitely help you in all aspects of life. 7. Read business related material There are a lot of great books on business, society, trends and such. Depending on your major, your classes might not be teaching what you want to do with your life. You need to find your own way to increase in business sophistication. From understanding marketing, managing a team, finances, strategies to overall trends in society, reading business related material can help students who lack real business experiences understand the how-to in developing a business. Also, there are many great business Podcasts out there that students can listen when completing other tasks. It is a great way to make better use of time and become more productive. Reading materials like Young Money magazine is a good start. 8. Study efficiently. Pay attention in class. So the big question about being a student entrepreneur for most people, besides how do you start, is how do you balance school and work? First of all, I would like to say that GPA is possibly not crucial in being an entrepreneur. Many of the best businesses were started by people who didn’t even have a college degree. However, it is always nice to have a degree, and a high GPA never hurts, especially when it’s what your parents only care about. The key is to study efficiently. The key to studying efficiently is to pay attention in class. Assume you are studying for the test, such as the SAT, and you have a tutor. It also happens that this tutor wrote the test him/herself. He might give you a lot of reading material that other people wrote, such as 5,000 SAT words and such, but when he actively tells you “Oh, and know this and this, and these 100 words,” you might want to do that. Listening in class is “almost” like cheating, as you will know what the professor likes to focus on. When you follow what a professor says in class, those lessons will “marinate” in your brain so when you are actually studying for the exam (for me it is always an all-nighter before the test) everything will look familiar. You’ll only need to memorize some key facts, dates or equations. For some majors, you need to train your muscle memories and it takes longer, but the point is to identify that quickly and focus on it. Finding the optimal point between time spent studying and the resulting grade yield is of utmost importance for a student entrepreneur. 9. Have a flexible mentality. Attitude is everything. The last piece of advice I would give you is to simply be a master of your mind and, as a result, your body. Think positively, take initiative and have a good attitude. There will always be a lot of obstacles in life, and it is our job to overcome them. For everything you do, have high hopes, try your hardest, and simply let life unfold before your eyes. Don’t get down due to short term issues, but be wise and think far ahead instead. In the big picture, all obstacles are not as bad as they seem. Develop the will and the mental toughness to face these issues and you will be well set on your road in becoming a student entrepreneur. (Also posted in http://www.youngmoney.com/entrepreneur/advice/070223) Category:Midterms or Angry Clients? The Student Entrepreneur